Morality and Corporate Governance: Firm Integrity and Spheres of Justice

112 Pages·2013·0.444 MB·English

by  Giulio Sapelli (auth.)

Morality and Corporate Governance:
Firm Integrity and Spheres of Justice
.
Giulio Sapelli
Morality and
Corporate
Governance: Firm
Integrity and Spheres
of Justice
GiulioSapelli
FondazioneEniEnricoMattei
Milano
Italy
TranslationbyBarbaraRacahandEsmeraldaRossi
ISBN978-88-470-2783-1 ISBN978-88-470-2784-8(eBook)
DOI10.1007/978-88-470-2784-8
SpringerMilanHeidelbergNewYorkDordrechtLondon
LibraryofCongressControlNumber:2012941920
#Springer-VerlagItalia2013
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Contents
1 Introduction:EthicsandJustice. . . . . . . . . . . . . . 1
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2 Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 LawIsNotEnough. . . . . . . . . . . . . . . . . . . . 9
2.2 BusinessEthicsandCorporateEthics:
WhyActionIsNecessary. . . . . . . . . . . . . . . . 10
2.3 Fromthe“RomanticSyndrome”toMoral
Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 VirtueandtheProblemofEvil. . . . . . . . . . . . 19
2.5 Ethics,ExchangesandGifts. . . . . . . . . . . . . . 21
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3 On“CorporateResponsibility”. . . . . . . . . . . . . . . 31
3.1 TheEnvironment:ReformulatingaConcept. . 31
3.1.1 CorporateResponsibilityasPartof
aFirm’sBusinessStrategy. . . . . . . . . . 35
3.1.2 TheThreeAreasof“Corporate
Responsibility”:Environmentaland
StrategicMultifactoriality. . . . . . . . . . 40
v
vi Contents
3.2 CorporateResponsibility:Typology
andPractice. . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.2.1 Firmsand“EconomicSociety”:Social
Responsibility. . . . . . . . . . . . . . . . . . . 42
3.2.2 Firmsand“PoliticalSociety”:Civil
Responsibility. . . . . . . . . . . . . . . . . . . 47
3.2.3 Firmsand“PoliticalSociety”:Political
Responsibility. . . . . . . . . . . . . . . . . . . 52
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4 EnvironmentalResponsibilityandCorporate
Culture:ThePrerequisitesforSelf-Regulation. . . 57
4.1 Firms,“EcologicalWelfare”andSustainable
Development. . . . . . . . . . . . . . . . . . . . . . . . . 57
4.2 ForaNewParadigmofCo-evolution. . . . . . . 63
4.3 ThePointofViewofSelf-Regulation. . . . . . . 69
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5 Responsibility“BeyondtheLaw”. . . . . . . . . . . . . 73
5.1 ChartersofValues,CodesofEthics. . . . . . . . . 73
5.2 TrainingDuties,Responsibilitiesand
Legitimation. . . . . . . . . . . . . . . . . . . . . . . . . 79
5.3 Justice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
6 FirmIntegrityandSpheresofJustice. . . . . . . . . . 85
6.1 WithRegardtoCorporateGovernance:
IslandsandTerraFirma. . . . . . . . . . . . . . . . . 85
6.2 WithRegardtotheSpheresofJustice
andIntegrity. . . . . . . . . . . . . . . . . . . . . . . . . 93
6.3 TransformingTransitivity. . . . . . . . . . . . . . . . 100
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
7 AFinalThoughtonReparativeJustice. . . . . . . . . 103
Chapter 1
Introduction: Ethics and Justice
This book collects my thoughts on the relationship between
morality and economics. I have been mulling over this issue
foralongtime,sincethemid1980s,whenIwrotetheintroduc-
tiontoacollectionofworksofseminalimportance[1]editedby
Hopt and Teubner. It was their work which prompted my
research, and its outcome was a number of papers that opened
a new stage in my thoughts on this theme [2]. In essence,
I realised the need to consider the philosophical dimension of
the relationship between morality and the most significant,
modern,socialaggregateofeconomicaction,thatis,thefirm.
At the international scale, the approach to this relationship
has been nothing more than intellectual speculation, and the
only objections to the prevailing technical perspective have
come from the German and French thinkers Luhmann and
Habermas, on the one hand, and from the phenomenologist
Ricouer, on the other. Objections can also be found in the
workofAnglo-Saxonphilosophersoflaw—suchasLyonsand
Green.
This misconception has downscaled the issue to the purely
economic sphere, and we are now perceiving its negative
consequencesatthesocial,moralandinstitutionallevel.
G.Sapelli,MoralityandCorporateGovernance:FirmIntegrity 1
andSpheresofJustice,DOI10.1007/978-88-470-2784-8_1,
#Springer-VerlagItalia2013
2 1 Introduction:EthicsandJustice
There is ongoing debate on ethical ratings: a shift from
“theory”toaction...economicaction,precisely.Agenciesand
companiesassignratingstofirms.Theyalsosellfirms,aproce-
dure to implement their ethical organisation. But is not an
organisation made first and foremost by people rather than by
systems? Can ethics be reduced to “packages” offered by
consultants? “Ethical” funds are sold on the financial markets.
These funds are fashionable in the new, well-off classes, but
theyarealsoappreciatedbywell-intentionedfirms,luredbythe
merchantsofthetemple.
There is also talk about attributing “ethical” certification
coupons, “assigned” and “maintained” by diligent consultants.
These coupons would be the pass to obtain contracts and
permits,toparticipateinassociationsandsoon.
Thereisconfusionontheconceptsofreputationandmoral-
ity, on the one hand, and on the concepts of reputation and
ethics,ontheotherhand.Thisisjustasdangerousasconfusing
the meanings of reputation and image. Reputation is what
citizensandmarketsthinkofafirm.Itistheoutcomeofstaunch
loyaltytoethicalprinciples,whichmustinevitablycontendwith
the changes in the ideals that upset human aggregates. For
example, let’s ask ourselves the following question: would a
firm investing in nuclear funds have a good reputation today?
Theanswerissimple:itsreputationwouldnotbedamagedifthe
investmentwasmadeinFrance,butitsurelywouldbedamaged
if the investment were made in Italy. The image of a firm is
different. It is the result of a masterly advertising operation. It
canbebuiltmuchmorequicklythanreputation,butitcanmelt
justasquickly,likesnowinthesun.
And now let us think of morality within firms and of the
ethical consequences of this morality. It is not a question of
reputation or image. It is a matter of personal ontological
choices,evenwhentheyaremadeonasharedbasis,asisalways
thecaseinsideafirm:choicesthatmustbetheresultofintimate
and deep beliefs. These choices will produce results as far as
1 Introduction:EthicsandJustice 3
reputationandimageareconcerned,butonlyinthelongterm.It
is impossible to assess their impact on the economic perfor-
manceoffirms.
Firms are a very special social construct with an economic
basis within which humans wage their fight against evil. This
fightrequiresbothasubjective andacollectivemoralcommit-
ment, i.e. ethics. The institutions that govern this process also
play a key role: first, Anglo Saxon rules of good governance,
andthentherulesdefinedbythehumanresourcesmanagement
of a firm, focused on the individual and on his/her universal
value. There is a broad range of tools available to pursue such
policies, but little thought is given to the philosophical
implicationsofsuchtools.
In this day and age, firm managements no longer represent
the strong commitment of a ruling class involved in mediating
between profits and listening toand fulfilling the wishes of the
stakeholders.Theyareoverwhelmedbytherequirementsofthe
ownership and can no longer be the valuable mediators of
growth. They simply cater to the key actors of the firm: its
shareholders.1 Theagencytheory has madeimportanttheoreti-
cal progress in this direction. The idea of rational allocation,
i.e.themoreeconomicallyconvenientallocation—ofownership
rights—has been developed only recently.2 I trust this will be
thebeginningofanewageforboththeoryandpractice.Atten-
tionwillbefocusedonthemoraljustificationofpropertyandon
the stock options offered to corporate executives. The social
differentiation produced by the lack of moral justification of
1Thereference toE.F. Fama isabsolutely necessary:[3].It wasRoberta
Garruccio,however,whobroughttomyattentionthehistoricalandtheo-
reticalrelevanceofthetransformationthatshehasdescribedverywellin
her Prefazione to F. Novara, R. Rozzi, R. Garruccio, Uomini e lavoro
all’Olivetti,Milano,BrunoMondadori,2005,pp.13–14.
2IwillbeforeverthankfultoBernardoBortolottiforcorrectingmyoriginal
opiniononthiswork[4]andforhelpingmeunderstanditsimportance.